IGF binding protein-1 (IGFBP-1) is a secretory product of decidualized endometrium and a major constituent of amniotic fluid. It is thought to modulate the actions of the IGFs on trophoblast cells and is therefore potentially important in regulating placental development and fetal growth. To investigate this hypothesis, we have studied the effects of decidual IGFBP-1 excess on fetoplacental growth in transgenic mice overexpressing human IGFBP-1. Endogenous fetal IGFBP-1 overexpression is associated with a transient impairment of fetal growth in midgestation. Maternal decidual IGFBP-1 excess is also associated with impaired fetal growth in midgestation independent of fetal genotype, indicating placental insufficiency. Our data also demonstrate that amniotic fluid IGFBP-1 is derived almost exclusively from maternal sources. Decidual IGFBP-1 overexpression has a marked effect on placental development. Placental morphology is abnormal in transgenic females due to altered trophoblast invasion and differentiation. These changes result in an increase in placental mass throughout pregnancy. This study provides the first compelling in vivo evidence that IGFBP-1 plays a role in placentation and suggests that IGFBP-1 has a pathological role in preeclampsia, a disorder characterized by shallow uterine invasion and altered placental development.